1. The entrepreneur does not properly assess their personal capital contact environment in the beginning stages in order to tailor their securities offering to meet those demands. You and your management team should "test the waters" by contacting only investors with whom you have a preexisting relationship.

2. The entrepreneur does not start the capital-raising effort early enough in the beginning of the project. It is better to raise capital in the beginning stages, when you have some of your initial capital to do it right, rather than wait until you run out of capital.

3. The entrepreneur spends too much time, money and effort soliciting the wrong sources of capital. In the beginning stages of a company, you have a relative position of strength when soliciting your personal and professional contacts because they already know you and trust your abilities to get the job done far more than any individual or organizational strangers, such as a venture capital, investment banking firms, or even "angel" investors.

4. The entrepreneur seeks too much capital for the project or company from the start. Your operational plan should be geared toward raising the minimum amount of capital necessary for each step in a series of securities offerings. This will accomplish two things: first, it will increase the probability of obtaining the desired capital sought and, second, it will allow you to maintain the maximum amount of equity ownership.

5. The entrepreneur spends too much time putting the cart in front of the horse. More often than not entrepreneurs spend too much time building their company or developing their project with little or no capital when they should be concentrating on raising capital.

6. The entrepreneur does not have enough of their capital committed to the project. Most investors want to hear that you have money (a.k.a. "Skin") in the deal. If you do not, one way to mitigate this is arrange to have you and/or your management team members sign personal guarantees on the debt financing or bank loan, if the company is bankable, or have friends and family members in the deal with their money.

7. The entrepreneur does not have a clear picture on the use of proceeds. You need to be very detailed in your use of proceeds statement, especially when conducting a securities offering.

8. The entrepreneur does not have an internal rate of return projected on the investment. Investors already know what the downside is - it's 100% loss. Most investors want to know what their internal rate of return on investment will be if things work out as planned. Rarely are these figures provided.

9. The entrepreneur does not provide a forward position on liquidation rights for investors in the case of business failure. You need to show investors that if the firm fails, they come first, or at least ahead of you and your founders, on liquidation rights on the company's assets, even though the assets may not be worth much.

10. The entrepreneur does not provide a sufficient amount of information in the business plan, which is required for a securities offering. Many very important elements are left out of the average business plans.

11. The entrepreneur does not guarantee an exit strategy for the investor. Although an IPO or an outright sale of the company or its assets may be a nice approach to an exit strategy, it cannot be guaranteed. You need to put a structure in place that will allow the investors to get their principal back in a relatively short period of time, with a strong probability of occurrence, while enjoying some upside potential over a longer period as well. For any company, there are no real guarantees; just try to get as close to one as you can for the investors.

12. The entrepreneur does not have a solid management team put together. Do what you can to put together at least a contingent management team if you have not done so already. Include the bios for each management team member in the business plan or the securities offering document. Make sure you have received signed letters of contingent commitments before you include their backgrounds, otherwise it could be construed as fraud in a securities offering document.

13. The entrepreneur requires a too large minimum initial investment. One should allow many investors to get into the deal with small amounts of capital. It is better to have fifty investors in at $10,000 for $500,000 equity raise than five investors at $100,000.

14. The entrepreneur does not allow ample time for raising capital. Like most things in business, it will take you longer and cost you more than you originally thought. We generally advise our clients to plan on a minimum of six months, and sometimes as long a twelve months, to raise the needed capital for only the first couple of rounds of financing.

15. The entrepreneur does not have enough seed capital dedicated to the capital-raising effort. Like a product launch, it takes promotional dollars to effectively raise capital. You need seed capital to promote the attainment of your development capital. If you do not have it, then raise it through a seed capital securities offering first. Before you decide upon a seed capital offering structure, you should produce your company's development capital offering structure prototype to be sure that each structure fits with the other. The seed capital is riskier by design, so the structure of a first or second lien debt position with a two or three year maturity should mitigate some of that risk and attract the initial seed capital.

The bottom line on these reasons why entrepreneurs fail to raise capital is that the vast majority of entrepreneurs do not have the intimate knowledge of how the world of capital works.

The article is contributed by By D.Anthony Bright, Founder & CEO, PDCA Holdings